CICT acquires 3rd Sydney property for A$422m

CAPITALAND Integrated Commercial Trust' s (CICT) manager has entered into an agreement to acquire a 50 per cent interest in an integrated development in Sydney, Australia for A$422 million (S$409.3 million)

The move comes shortly after CICT acquired 2 office buildings for A$330.7m earlier this month, as it looks to make further inroads into Australia. The country is its second overseas developed market after Germany.

The property, named 101 Miller Street and Greenwood Plaza, is an integrated development with a premium grade office tower and retail space in North Sydney' s central business district, said Tony Tan, chief executive of CICT' s manager, in a statement on Thursday (Dec 23).

" (The acquisition) will strategically augment our presence in Sydney, where we have embarked on acquiring 66 Goulburn Street and 100 Arthur Street. The total investment of approximately A$1.1 billion in the 3 Sydney properties will provide CICT with a new engine of growth in a developed market with strong fundamentals, and the potential to ride on the city' s gradual recovery and rejuvenation in the mid to long term," Tan added.

Post-acquisition, the 3 assets in Australia will account for about 5 per cent of CICT' s pro forma portfolio property value. Some 91 per cent of the enlarged portfolio by property value will be based in Singapore, while properties in Frankfurt and Sydney make up the rest.

The purchase price, negotiated on a willing-buyer willing-seller basis, is in line with an independent valuation commissioned by the manager of CICT. The property has a yield of 4.9 per cent, based on its annualised net property income (NPI) in the first half of this year, and a passing NPI yield of 5.6 per cent.

CICT' s total acquisition outlay is about A$454.4 million, consisting of the purchase price of A$422.0 million, other expenses of A$28.2 million and acquisition fees of A$4.2 million. This will be funded by a combination of debt, divestment proceeds and remaining proceeds of about S$95.9 million from a private placement that closed on Dec 8. The acquisition is expected to be completed in the first quarter of 2022.

Assuming that the transaction was completed on Jan 1, 2021 and the property was held and operated till June 30, 2021, the distribution per unit (DPU) accretion is expected to be 1.0 per cent, according to pro forma estimates.

The 3 Sydney assets are expected to provide a pro forma annualised combined first half 2021 DPU accretion of 2.8 per cent.

The property has a committed occupancy of 94.9 per cent as at Oct 20, 2021, with a weighted average lease expiry (WALE) of 3.6 years, based on committed monthly gross rental income.Tenants come from government, financial services and insurance sectors.

It is a freehold property comprising a 28-storey premium grade office tower, a 2-storey office building and a retail centre. The property has a total net lettable area of 46,403 sqm.

Post acquisitions of the three Australian properties, CICT' s pro forma aggregate leverage will be about 41 per cent, the Reit manager added.